Correlation Between Aimia and Whitecap Resources

Can any of the company-specific risk be diversified away by investing in both Aimia and Whitecap Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aimia and Whitecap Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aimia Inc and Whitecap Resources, you can compare the effects of market volatilities on Aimia and Whitecap Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aimia with a short position of Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Whitecap Resources.

Diversification Opportunities for Aimia and Whitecap Resources

0.67

Correlation Coefficient

Aimia  Whitecap Resources

Poor diversification

The 3 months correlation between Aimia and Whitecap is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources and Aimia is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aimia Inc are associated (or correlated) with Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Aimia i.e., Aimia and Whitecap Resources go up and down completely randomly.

Pair Corralation between Aimia and Whitecap Resources

Assuming the 90 days trading horizon Aimia Inc is expected to generate 0.69 times more return on investment than Whitecap Resources. However, Aimia Inc is 1.46 times less risky than Whitecap Resources. It trades about -0.01 of its potential returns per unit of risk. Whitecap Resources is currently generating about -0.03 per unit of risk. If you would invest  264.00  in Aimia Inc on December 30, 2024 and sell it today you would lose (4.00) from holding Aimia Inc or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aimia Inc  vs.  Whitecap Resources

Aimia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aimia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Aimia is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Whitecap Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Whitecap Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Whitecap Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aimia and Whitecap Resources

The main advantage of trading using opposite Aimia and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Whitecap Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.

The idea behind Aimia Inc and Whitecap Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.